Steam indefinite update paused

So recently I had an issue with Steam where the Witcher 2 update got stuck at 99% and the status "Update Paused". No matter what I tried with the pause/resume button, I couldn't get it to budge from this status and actually update.

After a while I grabbed Process Explorer from the Microsoft website and checked the files that were being opened when I toggled this state. I noticed a reference to Steamsteamappsdownloading20920CookedPCpack0.dzip. Then I also noticed a file reference to Steamsteamapplogscontent.log. Upon checking that file I found a notice that it was trying to preallocate about 11 GB for this pack0.dzip. Checking my drive status, I saw that this particular drive letter only had about 9 GB left. Freeing up some space allowed the update process to actually start and finish, after which I got even more space back, since it seems Steam downloads these files and then replaces them, deleting the temporary one. So I guess the lesson learnt is that you should always have enough disk space free as the single largest file in any of your games.